M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Saturday, December 19, 2009

GM: 0 for 4?

When GM came out of bankruptcy the plan was pretty simple.  It would shut a number of divisions and then shed four of others - Opel, Saturn, Saab and Hummer.   GM balked at the Opel sale after walking most of the way down the aisle.  The Saturn deal collapsed after Penske walked away.  GM then announced that it would shutter Saturn rather than try to find another buyer.  The proposed deal to sell Saab to Koenigsegg Group in Sweden, but that deal fell through.  Then, GM entered into discussions with Spyker Cars also in Sweden.  After those talks fell apart yesterday GM announced that Saab, too, would be shuttered. 

0 for 3 is a pretty poor batting average.  At least the Hummer sale went through, right?   Right?  I mean, GM announced the deal to sell the Hummer brand to some company no one ever heard of before not once, but twice.  So, that sale went through, didn't it?  Oh, that's right.  The deal was contingent upon getting approval from the Chinese government.   Guess who hasn't approved the deal, yet?   Don't hold your breath.  

-bjmq

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Comments

Great post, Brian. I spent a year on a consulting job at GM in the late 80s and read Maryann Keller's excellent book "Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors" not long afterwards, so none of this comes as much of a surprise to me. The company long ago ceased to be about products and customers and became all about financial engineering and corner-cutting and bureaucracy. It didn't help that with the power of our labor unions we managed to build an American middle class on the backs of a domestic industry (high hourly wages, pensions, health benefits for low skill assembly jobs) despite the reality of increasingly global competition. A good thing for the middle class to be sure, but not sustainable given that it translated into a per car cost of $1500 bucks that competitors didn't have to deal with. They just failed to grasp it is a global market. The smash success of the original VW bug was their first warning. The gas crisis of the early 70s was their second warning. The invasion of cheaper better made Japanese cars was their third warning. By the time the Japanese had taken the middle of the market, the European brands took the high end, and the Koreans were attacking the low end, all they could muster by way of response was pick-ups and SUVs which where protected by tariffs, and not subject to the same fuel mileage and crashworthiness standards. Pretty lame and short-sighted response. Will be interesting to see the Chinese and Indian cars wash over this market next...

Posted by: Christopher Mirabile | Dec 20, 2009 5:15:23 PM

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